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QBE confirms it is looking at reducing staff

ELEANOR HALL: Well as disasters hit communities across Australia, one major insurer has posted a rise in its profit.

QBE says it's cut back on insurance cover in risky areas and has cut its dividend payout to investors after being hit by high claims after Super Storm Sandy in the US.

Finance reporter, Sue Lannin joins us now.

So sue, QBE posted a rise in its profit, how did investors react?

SUE LANNIN: Yes, well they were quite disappointed. QBE shares down more than 3 per cent, nearly 4 per cent actually, to $12.56 and that's because they cut the dividend by more than half, it's now down to 10 cents, and that is because, very much, as you mentioned, QBE were hit by Super Storm Sandy in the US and also the severe US drought.

Now still though, they did post an annual net profit for 2012 of $761 million, so that was actually up 8 per cent and the company said that was in line with their guidance.

Now for Australia and New Zealand, they say trading conditions were good, but they do expect to take a hit of more than $50 million from the storms and the cyclone in New South Wales and Queensland over summer.

The chief executive, John Neal, says QBE has cut back on insurance coverage in risky or catastrophe-exposed areas, so it had fewer losses from insurance payouts.

JOHN NEAL: It's always been our intention to be clear in defining that we will only write a risk where we can get the right price for the exposure we're being asked to. So we've cut back in cat-exposed areas and typically when you look at the market losses being reported for floods or catastrophe damage in Australia, our market loss is 10 per cent or less of the market loss.

So when you look at Cyclone Oswald, we're talking about loss forecasts of $55 million to $60 million.

ELEANOR HALL: That's QBE chief executive John Neal. Sue there have also been reports that QBE would also be cutting jobs. Did the company’s CEO say anything about that today?

SUE LANNIN: Yes, he was just grilled by journalists on a media conference. He did confirm they're looking at reducing staff across operations. He said a figure of about 700 was in the ballpark. Now that's what's been reported.

He said that was based on documents that were worked on late last year, but he said the 700 would be across operations in Europe, North America, he didn't mention Australia, but he said major operations and he dismissed reports of a 3,000 figure being sent to Manilla.

ELEANOR HALL: Very briefly Sue, Virgin Australia also announced its results today: what do they reveal?

SUE LANNIN: Yes, they came in with $23 million half-year profit, now that's down by more than half from the same time a year ago. They're being hit by the carbon tax and also by increased competition from Qantas.